The 95% of losers, it's true?

Yeah, I've got no idea how someone was able to define "losing", then subsequently aggregate information across the entire retail fx market to say that 95% of people in retail forex are losing. I've seen it so many times without references, so I call BS on the number.

Does anyone actually have the source for this information that is not just personal speculation? I highly doubt it.

It is a well known fact that 89.637% of statistics are just made up on the spot anyway.

You need a rat to win.

http://www.artmarcovici.com/rat-traders

My observation is that a lot of people getting into FX should not be trading in the first place. It's a business and if you're not prepared to treat it like you would any other business then you're likely to fail.

Think about it like this,if it was the 1980s and in order to trade you had to save up a big amount of money, get a seat on an exchange and go and trade on a floor would you be persuing this career?

The fact that the markets are so accessible and the barrier to entry is so low just means that a bunch of people are jumping in expecting quick easy money, people are selling get rich quick to them and the brokers are literally paying people to open accounts.

There is a similar statistic for new businesses failing in the first year, largely because many people are simply not cut out to be entrepreneurs or are not prepared to work on themselves enough to make the necessary changes. Same with trading.

this kind of vague statement requires so much unverifiable and unstandardised information there will never ever be any chance it could be agreed or disagreed upon.
this 95% thingie has been asked by so many people in so many threads and its peppered with many smart logical responses i'm surprised it keeps popping up.

to specify a percentage, u need homogenous subjects of study, which is fx traders. how do u define fx traders? trader A took only one trade ever in his life and he bet all, doubled his money and went to hawaii. trader B traded for yrs and is up 3 usd. trader C took one trade, lost 50 usd and nv login again.
some has an acct with 8 brokers, some only 1

traders come in so many shapes and sizes they vary more than the micro organisms on your skin.

Yeah, I think it is true but not at all time there are many who invest and make a lot of money. what you guys say above is also appreciable.

Nobody knows except the brokers.

But the question is, why are there so many traders out there (and the number keeps growing) even though they would probably join the bunch of losers?

the legend of the loosing 95%, of course we are not talking about thoes traders who are still active, keep in mind there are millions who tried and quit half way, those who went demo then never continued, and considering there is only a couple of thousands active in forums, yeah i guess its safe to say 90% do fail/quit as early as day one. forex trading is for those who fall and fail yet the continue to learn and strive and maybe make a decent buck by the end of the day

Good question. Some possible answers:

1. Greed.
2. Forex offers the lure of apparently 'easy' money. After all, price can only move up or down, and we need only to be right more often than 50/50 in order to make money...... or so it seems.
3. Without wishing to be unkind, many of us overrate our own intelligence (it's called the Dunning-Kruger effect), and I suspect likewise overrate our ability to control our emotions to the point needed to trade successfully.

As other users already wrote I don't think that market changed a lot. People are the same. Despite the whole new things about analysis we still have greedy lazy human beings. For trading you should learn a lot of things, build your strategy and be ready always modify it. It took about 3-5 years. As for me that's ok that 5% of people can do it. That's actually even high percent.

Hi all, I've just signed up to FF and want to become an active member. I've been researching forex and trading demo accounts for almost three years, and began my first live account with $1000 AUD less than two weeks ago. I'm a stay at home Dad with a partner who works full time and supports my trading ambitions 100%, so in this I am very lucky.

Having read most of this thread, I'd like to say a few things I believe to be true:

1. The touted 95% should not be a frightening statistic to people who take their trading seriously. Who knows where these statistics really come from?
95% of people don't have any clue about how the markets work, but some of them open accounts anyway.

2. Your loss is not another's gain
Many ppl on this thread have expressed the idea that it's like if 95% of traders fail only 5% make a killing, or that every losing trade must have an equal winner on the other side of it. This is complete nonsense. Try to remember that market traders and speculators only comprise one half of the market. Firms, governments and every primary resource needs to take positions on the currency markets frequently, in order to hedge positions against currency risk, and they are subject to exactly the same uncertainty as traders are.
When you look at long and short currency positions on a long enough time-frame, the inverse correlation between commercial (funds, traders, banks) and non-commercial (firms, gov's, producers..) is about .98, meaning that 98% of the time a trader makes a move, there's a non-trader participant at the other end to take it.
Try not to forget that retail traders like us do nothing whatsoever to move the market, no matter how many are using the same EA.
i
3. There is a lot of suspicion and distrust around brokers. My advice is get to know your broker. If I thought for one second that my broker was mis-quoting me, I would fly my retail-trading self down to Melbourne and kick his banker-punk ass up and down Flinders Street, without mercy.
I don't. I like my broker and they like me. We are not in competition with each other, and anyone who feels that way needs to check themselves before they proverbially wreck themselves.

Now that sums up the initial post effectively..of course, there are a few scam brokers and the 95% figure, where is the poser getting the stats from? Granted that a lot of new traders wipe out their accounts within hours of setting up a live account but to use that as a valid reason to avoid this market does not make sense. It's like "so many fatalities occur when a plane crashes so we should never travel by air"..the logic is faulty at best.

Thanks Forexnuts.
We all know about the importance of psychology in trading, and that has begin with the simplest things like how you view the market, the relationship you have with the market. How do you see it?
As Bill Williams likes to say, "the market is not your problem."
Remind yourself just what a staggeringly complicated thing the currency markets are and how they are connected to every other market.
I've heard some people on here expressing the view that retail trading through a broker is not the "real" forex market.
It is the real market. Every position you take through your ECN broker, the liquidity provider issues overnight swap paper to fund it. Which provider actually issues the swap depends on who took the other side of your bid or ask - i.e. how they were trading. These forex swap papers are then settled on the interbank market every 24 hours.
The market is also inseparable from the currency options, futures, bonds markets etc. These markets are used in daily business for companies all over the world. A wheat-farming company in Australia may wish to hedge it's currency risk on the commodities market at price x, while an oil drilling company in Canada may want price y. Because price can't be in two places at once, they cannot make all their trades at the same time, but accumulate them over time as the market moves to where they want it to be. The point I am trying to make is that two parties can disagree on price but agree on value.
They have entered the market at different prices, but neither has necessarily lost.

Ah well, just stating the obvious and actually, some of the posts in this thread can help a newbie find his/her way in this market.

No the number of 95% is not true. It spread over the forum and gets quoted dozend times without asking if it has a solid base.

The number of profitable traders is about 25%-40%~

source?
http://forexmagnates.com/forex-broke...profitability/
http://trading-gurus.com/fxcm-releas...ty-statistics/

Figures quoted by br0kers don't necessarily tell the full story.

To explain one possible reason, albeit simplistically: suppose 30 traders are profitable, and 70 fail (and quit trading). Then, say 6 months later, the same 30 remain profitable on the br0ker's books, while another 70 have meanwhile failed. And so on. So, at any given point in time, the br0ker will report a 30% success rate, but in reality the number of profitable traders is 30, while the number that have failed is 70+70+70+70+70+........ I agree that's an overly simplistic explanation, and I've picked arbitrary numbers, but I believe that the general idea is valid.

Also, a large number of traders use grids and dodgy MMs (e.g. martingales) that can run profitably for a long time before they implode.

It's in the br0ker's best interests to frame the figures in such a way as to make trading appear as easy as possible, for obvious reasons.

I think the hard thing is protect the profit earned, many times just give it away. so at winning point is winner then be loser.

@TS owl & hanover

I am totally aware of the problem with the numbers published by traders.

Yes, they are maybee not true, but you always have the problem with statistics.

My intention to post it was merely, that i'm annoying by everytime people quoting this "95% lose" BS. I've not came across any statistic that states this number, so imho its only spreaded by loosers to discourage people.

I have no formal proof, but it wouldn't surprise me if the number of traders fail and quit is significantly higher than 95%. That's assuming we include everybody who opens an account, and takes into account all of the dodgy MMs that will eventually fail.

I'm not trying to discourage people. I personally know 3 traders who have a track record of profitability that's > 4 years. And a couple more who post here on the forum, who obviously know what they're talking about. But they are in a definite minority.

On the topic of BS, I think most of the BS on forums comes from folk who try to make it appear that they're profitable.

Anyway, the most important point is that just because a great number of traders fail, is that YOU (and ME) don't have to be among them. It's a case of finding a robust edge and having the patience and nerve to apply it consistently. Very difficult, but not impossible. Here's a good post, written by a trader with 30+ years' experience, that explains some of the requirements, and the difficulties, involved.

"so, imho it's only spreaded by loosers to discourage people."

correct. it's a conspiracy. in reality most people are making loads of money and it's why most people you ever meet throughout your life are successful traders. the few losers pay all of the money that the winners make millions from.

.....

now back to the real world where most traders fail, where most businesses fail, where most endeavors of any kind fail, where most people have never heard of forex or know anything about trading, and where those who 'think' they know anything about trading and have opinions about everything related to trading have spent about 5 seconds looking it up on google.

it doesn't take much of an imagination to understand why and how most people fail. the world is full of failure.

imho.

@hanover

"That's assuming we include everybody who opens an account, and takes into account all of the dodgy MMs that will eventually fail."

And thats the point, so what if we:
-exclude all the stupid dreamers with their martingale MM or stupid 99$ EA.
-take in account traders, who are in the game for over 1 year

Yes, there are many idiots (sorry to be so hard) out there. I always wondered who clicks all the Spam-Emails, so there must be a lot of not so smart people out there.

If you see my above posted links you see that how larger the account is, the more profitable are the traders. Almost 50% profitable, but you are right its numbers posted by brokers and you have to be aware to account them high credibility.

I already knew the post you was linking to. Many good things, but when it comes to probabilites, he failed.
a) He said that theres higher probability to win in the Powerball lottery than be a successful trader. That can't be taken serious, honestly.
b) He's talking about the fact that there are only 800 successful traders in the US. I really doubt this number. And as he (suprise, suprise) named no source, there's no way to verify this.


@nubcake

Great job, you are critisizing the grammar of a non-native English-speaker, in an international Forum, well done!

Please learn to read. I nowhere stated that the most of people win. It's just the 95% number that bothers me.
Imho if you take FX serious in all terms (MM,edge,psychology...) the failure rate is way below 95%.